Students who default on their loans should be arrested, claims Think Tank

The Higher Education Policy Institute (HEPI) has suggested that students, and in particular those who come from the EU to study in Britain, should be arrested and prosecuted if they don’t pay back their student loans.

If an overseas student goes back to their home country after graduation, or if a British student emigrates abroad, it is very difficult for the government to compel them to make their loan repayments. As a result, it is estimated that 11% of former students from the EU have defaulted on their loans, costing the government hundreds of millions of pounds. The same problem exists with British students. It is estimated some 14,000 have emigrated and subsequently defaulted on their loans.

HEPI’s new proposals are aimed at discouraging this practice by arresting defaulters at the border should they ever return to Britain. The author of the proposals, Nick Hillman, claims the plan would act as a strong deterrent to evading loan repayment. He also pointed out that a similar system has proved very effective in New Zealand, which had a similar problem with Australian students avoiding repayments by moving back home after their graduation.

The report estimates that for every £1 New Zealand spent pursuing non-payers, it got over £22 back. Mr Hillman described the policy as “like a fruit machine that pays out twenty-two times the stake on every spin… I cannot remember coming across any policy that was so efficient during my three-and-a-half years in Whitehall.”

However, students living abroad have criticised the student loans company for not adjusting its income thresholds to accurately reflect their earnings abroad. It is also difficult to communicate with the company from abroad as it does not use email and all official correspondence must be done by post.

Although defaulting on student loans was made a criminal offence in 2014, there have only been three prosecutions made in connection with non-repayment of a student loan. Mr Hillman’s proposals would certainly change that if implemented, although it is hoped that making an example of the most egregious offenders would deter others from avoiding repaying their own student loans.

The government has yet to comment on the independent think tank’s recommendation.